This new development is a rather big deal.  Icahn owned 11,991,000 shares of Yahoo’s stock as of December 31st, 2009, and a new SEC document revealed that by the time March 31st rolled around, he’d reduced his holding to 4,041,363 shares.  That works out to a decrease of 66.3 percent.

Icahn appears to be rather more confident in the ability of Lions Gate Entertainment (his latest takeover target) to make money than Yahoo, then.

This sale isn’t without precedent, though.  In February, we reported that Icahn had distanced himself from Yahoo in an even more dramatic matter, unloading around 48.5 million shares of the company’s stock in the last few months of 2009.

Also, it’s important to remember that Icahn is considered to be a corporate raider, not a long-term investor, so this sort of reversal is natural for him to make.

Then here’s one more noteworthy point: while Yahoo’s stock is down 0.68 percent so far today, that puts it ahead of the Nasdaq, which is down 0.76 percent at the moment.

SEC filings reveal that Icahn owned a whopping 60,452,099 shares of Yahoo’s stock as of August 14th, 2009.  By the time December 31st rolled around, the number of shares he owned had decreased to 11,991,000.

Obviously, then, Icahn doesn’t intend to go on the attack against Carol Bartz and the current board, which might be good news for Yahoo.  Optimists could interpret Icahn’s move as a sign of contentment.  (Or perhaps he managed to reap some profits at one point.)

Icahn’s move might be a sign of surrender, however.  As the graph below shows, Yahoo’s stock was at nearly the same level on Friday as it was six months ago.

Anyway, perhaps as a result of this development, Yahoo’s stock is down a bit this morning.  Neither Icahn nor Yahoo has issued a statement on the matter.

It’s important to note that the move isn’t supposed to be interpreted as the first step in starting another fight.  Or even as a sign of disapproval.  In fact, in a letter announcing his resignation, Icahn made it sound more like a case of "mission accomplished" and "time to move on."

"When I joined the Board, the company was in a state of turmoil," he wrote.  "In the period since then, we have all worked together to achieve much for the Company, most notably bringing Carol on to be the CEO and then consummating the search deal with Microsoft.  I am proud to have played a role in both these decisions.  Carol is doing a great job and I believe the Microsoft transaction will provide great long term benefits, the potential of which many still do not understand.

Icahn then continued, "I don’t believe that it is necessary at this time to have an activist on the Board of Yahoo! and currently, my attention is focused on other matters."

Then here’s one more important detail: Icahn remains a major investor in Yahoo, with a 4.5 percent stake.

Still, shareholders don’t seem to have taken news of his resignation well.  Yahoo’s stock is down 1.39 percent this morning even though the Dow and the Nasdaq have both made slight gains.

"I’ve been a strong advocate of getting a search deal done with Microsoft," Icahn recently told Reuters.  "It would enhance value if a deal got done, because of the synergies involved."

This is an interesting time for Icahn to state his opinion.  There haven’t been any hints that he’s up to something rebellious; Icahn actually also told Reuters that he’s a "strong supporter" of Carol Bartz.  For that matter, since he still controls just three out of eleven seats on Yahoo’s board of directors, Icahn can’t force any changes.

So what we may have is another clue that a partnership between Microsoft and Yahoo is about to take place.  If so, Icahn could more or less speak his mind on the subject without creating any fresh rifts.

This series of developments has dragged on for months, but it looks like we could finally be getting somewhere, then.  Yahoo’s earnings report tomorrow may turn out to be quite interesting.

As you’re probably well aware by now, Microsoft offered to buy Yahoo earlier this year, then pulled out after Yahoo resisted, and then appeared to go crawling back after a failed advertising deal with Google and a plummeting of stock value. Recently Yahoo CEO Jerry Yang was reported to be departing from his role with the company and naturally the chitter chatter about a possible Microhoo deal emerged yet again. And was shot down again by Microsoft, though an interest in Yahoo’s search business is still evident.

The latest gossip to circulate stems from an article at Times Online, which reports that Microsoft is in talks to acquire Yahoo’s search business for $20 billion. Unsurprisingly, this report has been yet again shot down. BoomTown (of the Wall Street Journal network) writer Kara Swisher dismisses it as "total fiction" after BoomTown spoke with "top sources" at both Yahoo and Microsoft" who deny that any such talks have been happening.

That doesn’t mean that they won’t though. Despite the constant back and forth of whether or not the two companies are going to make a deal or no deal, there’s no denying that the concept makes a lot of sense from some angles. Even Swisher calls a deal more than likely at some point.

"It makes sense on many levels and is supported by Carl Icahn, the Yahoo board member who upped his money-losing stake in the company last week," says Swisher. "That stock purchase should be enough of a reason for there to be no Microsoft-Yahoo search deal imminent, given Icahn would be more than well aware of it and buying up almost seven million Yahoo shares–now at historic lows–only days ago would smack of insider trading."

Swisher can’t help but acknowledge the amount of detail in the Times Online article though. The Times Online report says:

Under the terms of the proposed transaction, Microsoft would provide a $5 billion facility to the Miller and Levinsohn management team. The duo would raise an additional $5 billion from external investors.

This cash would be used to buy convertible preference shares and warrants which would give it a holding in excess of 30% of Yahoo.

It also mentions Microsoft obtaining a ten-year operating agreement for managing the search business as well as a two-year call option to buy the search business for $20 billion.

Very curious indeed. The source used to obtain this info is unclear, but it does seem awfully specific for rumor. Something tells me this is only getting started. It’s going to be hard to truly believe anything we hear until we see something official from the parties involved.

Biondi was pretty much a lock since earlier this week.  Chapple’s appointment comes as a bit of surprise, since Edward Meyer looked more likely to join the leadership club.  All three men are liable to follow Icahn’s lead in any vote, of course, so there shouldn’t be any appreciable difference between them in that respect.

The one way in which the changeup may matter relates to Chapple’s background.  Chapple’s a telecommunications pro, with a resume listing recognizable names like Nextel and AT&T among others.  Since mobile search and marketing is supposed to be the next big thing, this could prove important.

Meyer, meanwhile, didn’t have much Yahoo-relevant experience aside from some strong connections at Grey Global Group, an advertising and marketing entity.  As for education, Chapple went to Syracuse University and Harvard, while Meyer went to Cornell.  Meh.

Call it a side note or connect the dots as you please: Yahoo’s stock edged up a bit today, gaining most of a percentage point.

Carl Icahn first named Meyer and Biondi in May as part of a slate that would have replaced Yahoo’s entire board, and the choice about who will get to step forward remains his.  Kara Swisher referred to "several sources with knowledge of the situation" when pointing to them earlier today.

 Frank J. Biondi, Jr.

The men appear to be uncontroversial picks.  Meyer attended Cornell and has worked with Ocean Road Advisors, Grey Global Group, Harman International Industries, Ethan Allen Interiors, National CineMedia, and NRDC Acquisition Corp.

Biondi went to Princeton and Harvard and has ties to WaterView Advisors, Universal Studios, Viacom, Amgen, Cablevision, Hasbro, The Bank of New York Mellon, and Seagate Technology.

They lack search experience, obviously, but must have an understanding of advertising.  And unlike Mark Cuban (who was also on Icahn’s original list), they don’t have any history with Yahoo, which should make them more objective.

Yahoo’s up about 1.38 percent while both the Dow and Nasdaq are down, so investors seem to approve.

Icahn (or a ghostwriter) stated, "I will not be attending.  The proxy fight is over and it will not do shareholders or Yahoo! any good to have the annual meeting turn into a media event for no purpose."

Icahn may be right about his presence creating a hubbub – seating arrangements were a matter of great interest, and bookies were probably taking bets on whether he and Yang would get into a scrap.  In fact, it’s for reasons like these your WebProNews writers are sad he’s not attending.

Still, it’s interesting that the new board member would skip the first meeting after his long, hard-fought battle.  As Yahoo’s stock stands only 80 cents above where it was six months ago, his no-show is surely something shareholders will want to consider.

They may also want to think about the appropriateness of referring to oneself in the third person.  Icahn (or his ghostwriter) managed to do that once in the bailing-out blog post.

Gordon Crawford works with Capital Research and Management, and Capital Research and Management owns a 6.5 percent stake in Yahoo.  During the original dispute, Crawford indicated he was more likely to support Carl Icahn than Jerry Yang and Roy Bostock.

 Gordon Crawford

Now, as reported by the New York Post, Crawford “may yank support for the pair at Friday’s annual meeting, sources close to the fund manager said. . . . The move will be largely symbolic – shareholders won’t be able to vote out board members because of the now-settled proxy contest with Icahn – but it sends yet another signal to the market that Yahoo! shareholders are not happy.”

And the market – which has been pummeling Yahoo over the last six months and is sending the stock down again this morning – seems ready to respond to bad news.

We may not get to see a brawl between Yang and Icahn, then, but August 1st looks to remain an interesting and important day.

Under a newly announced settlement, Carl Icahn and two of his cohorts will be elected to Yahoo’s board of directors.

Following the 2008 annual meeting, the Yahoo! Board will be expanded to 11 members. Carl Icahn will be appointed to the Board and the remaining two seats will be filled by the Board upon the recommendation of the Board’s Nominating and Governance Committee from a list of nine candidates recommended by Mr. Icahn, which includes the eight remaining members of the Icahn slate of nominees and Jonathan Miller, currently a partner in Velocity Interactive Group and former Chairman and CEO of AOL.

OK, so is Icahn still going to press Yahoo for a Microsoft sale? Well, there appears to be some conflicting positions.

Yahoo says (emphasis added)…

“This agreement will not only allow Yahoo! to put the distraction of the proxy contest behind us, it will allow the Company to continue pursuing its strategy of being the starting point for Internet users and a must buy for advertisers,” said Yahoo! Co-founder and Chief Executive Officer Jerry Yang. “No other company in the Internet space has our unique combination of global brand, talented employees, innovative technologies and exceptional assets, attributes that will help us take advantage of the large and growing opportunity ahead of us. I look forward to working together with our new colleagues on the Board to make that happen.”

Everything from Yang screams "we’re not selling, we’re building." Meanwhile Carl Icahn clearly sees things differently…

“I am very pleased that this settlement will allow me to work in partnership with Yahoo!’s Board and management team to help the Company achieve its full potential. While I continue to believe that the sale of the whole Company or the sale of its Search business in the right transaction must be given full consideration, I share the view that Yahoo!’s valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders…"

He seems to still be gung-ho for a sale to Microsoft, and when you consider that his statement is included in an official Yahoo press release, it’s clear that Yahoo’s board feels the same way.

So, with the proxy battle behind them, will we finally see a Yahoo/Microsoft merger?

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